Global engineering and construction deals insights: Q2 2019

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Executive summary

Continuing the trend observed in Q1 2019, M&A activity within the sector continues to trend downward compared to prior years driven largely by volume of activity (YTD June 19 down 15% versus 2018 YTD June). While overall activity is down, Q2 2019 overall deal value climbed 17% versus Q1 2019, a historically seasonal trend observed (YTD June 19 value is down 17% versus the same YTD June period in 2018). Similar themes observed over the last six months continue to weigh on M&A within the sector. Ongoing geopolitical tensions and concerns about the economic outlook are overshadowing otherwise positive macro factors for the sector which create opportunities for growth and historically have driven M&A (i.e., infrastructure needs). Absent significant movement toward resolving some of the more significant events contributing to the geopolitical tensions, we are likely to see a continued drag on M&A activity compared to historical periods.

ec-deal-activity

Key trends/highlights

  • In Q2 2019, deal value was ~$20 billion, an increase of 17% over Q1 2019 and a decline of the same percentage in YTD 2019 over YTD 2018. The deal volume in Q2 2019 declined by 8% over Q1 2019 and by 15% in YTD 2019 over YTD 2018.
  • Average deal size in Q2 2019 increased by 22% to $102.4 million, when compared to Q1 2019 but declined slightly by 3% for YTD 2019 when compared with YTD 2018.
  • In terms of both deal value and volume, Asia and Oceania was the most active acquirer and the most targeted region in Q2 2019. The region contributed 57% and 58% in deal value as the acquirer and target region, respectively.

“Q2 2019 M&A activity increased compared to Q1 2019, but continues to lag historical periods reflecting the ongoing impact of geopolitical tensions and overshadow macro factors otherwise positive for the sector.”

Colin McIntyre, US Engineering and Construction Deals Leader

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Colin McIntyre

Engineering and Construction Deals Leader, PwC US

Michael Sobolewski

Private Company Services, Market Team Leader, PwC US

Jonathan Hook

Global Engineering and Construction Leader, PwC United Kingdom

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